After GOP members leave, Democrats on budget panel pass plan to restore $40 million to cities and towns

AUGUSTA, Maine — In a surprise move late Monday afternoon, Democrats on the Legislature’s budget-writing Appropriations Committee approved a bill that would restore $40 million in state revenue sharing to Maine municipalities.

Without any Republican members of the committee present, majority Democrats on the committee voted 7-0 to send the measure to the full Legislature.

The move outraged Republicans and drew immediate condemnation from GOP legislative leadership and Gov. Paul LePage’s office. LePage’s press secretary, Adrienne Bennett, said the governor would veto the bill if the Democrat-controlled Legislature sends it to him.

“Republicans are not on board for this and the governor has their back,” Bennett said.

If the measure moves forward beyond his veto, the governor has vowed to withhold authorizing between $85 million and $100 million in state borrowing that would fund a range of infrastructure improvements statewide.

Rep. Peggy Rotundo, D-Lewiston, House chairwoman of the committee, said the move Monday was necessary to restore the funding in time for towns and cities to prepare their annual budgets.

Most of the funding in question would come to municipalities in 2015 but many towns will be presenting their budgets to voters in March.

“Once those town meetings take place, their budgets are set and that’s when they start talking about letting firefighters go, letting police officers go …” Rotundo said. “That’s why it’s critical to take action now.”

Sen. Dawn Hill, D-Cape Neddick, Senate chairwoman of the committee, said she was disappointed Republicans on the committee chose not to take part in Monday’s vote. However, Republican leaders said their members believed the vote was going to be tabled until Tuesday afternoon.

Hill said she and her Democratic colleagues on the committee were committed to a promise to restore revenue sharing to municipalities in an attempt to prevent property taxpayers from seeing steep increases as towns and cities scrambled to make up lost revenue.

Hill said Democrats came to the decision to move forward alone after several discussions over the last few weeks with their Republican colleagues, including some conversations on Monday.

“Based on that we realized, putting this off any longer wasn’t going to change the outcome,” Hill said.

Republicans on the committee reached by cellphone Monday night said they were under the impression there was to be a public discussion and vote on the measure Tuesday.

“I am absolutely stunned by this brazen move by the Democrats,” said the lead Republican on the committee, Rep. Kathy Chase of Wells. “I left the State House with the understanding that we would not vote on the measure until tomorrow afternoon.”

The Democratic plan to restore the funding depends on moving funding from several sources including $21 million from the state’s “budget stabilization fund,” essentially the state’s savings account.

The fund contains about $60 million, but Republicans said raiding it will hurt the state’s bond rating, which determines the interest rates at which the state can borrow money. The Democratic plan would restore that funding come July 1. It also depends on a $15 million windfall in the state’s most recent revenue projection, Another forecast is due in March that would paint a clearer picture of what funds the state will have available for 2015.

Another $4 million in the Democratic plan comes from a fund that was set up to eventually reduce the state’s income tax rate.

Finance Commissioner Sawin Millett said there was little doubt the rating agencies in New York would downgrade the state credit rating if the stabilization fund is not maintained. Millett also said it’s questionable to count on a revenue forecast that has not been issued yet.

Republicans also said Democrats were jumping the gun by trying to fix municipal finances for 2015 without first addressing the budget shortfall the state is facing for 2014.

“It feels to me like this is a premature political move that should have been held in abeyance, if there’s an attempt to look at the shortfall that we know exists in our operating budget, why wouldn’t it be more sensible to deal with the current fiscal year shortfall rather than to try and jump out ahead and resolve a [fiscal year] 2015 issue?” Millett said.

Millett said a change in the bond rating could bump the state’s borrowing interest rates by as much as 1 percent.

“And when we are talking about $100 million, over a 10-year term, that really starts to add up,” Millett said.

He and other Republicans also questioned why the committee did not accept any recommendations from a special legislative task force that worked through the summer and fall of 2013 to come up with the $40 million needed to restore municipal revenue sharing.

“What they are really saying tonight is that task force can’t find a nickel to address what they previously authorized as spending, so now they are rushing around trying to find a way to plug a hole and getting way ahead of themselves on dealing with the more immediate problems of the current year budget shortfall,” Millett said.

House Minority Leader Ken Fredette, R-Newport, called the move unprecedented and one that would create a difficult environment as lawmakers struggle to reach bipartisan compromise on other contentious issues during this legislative session, which is set to adjourn in April.

He and Senate Minority Leader Michael Thibodeau, R-Winterport, noted the committee’s chairmen in recent years have prided themselves in producing either unanimous or at least bipartisan budget solutions.

“Our committee members have requested, Republican leadership has requested that we deal with 2014 because we feel that’s the most important priority — paying our bills and doing that in a responsible way,” Fredette said. “For the Democrats to push forward with a vote without one [GOP] committee member sitting at the table is irresponsible.”

Thibodeau said Republicans on the committee were not aware the vote was coming and were not afforded the opportunity to debate the bill.

“It suggests that Republicans decided not to be part of the process, which is completely false,” Thibodeau said. “They voted out a bill, without discussion, that is simply something that was worked out by the Democratic caucus. Whether they misled the committee by mistake or on purpose, it’s unfortunate to put their colleagues in this kind of position. Republicans and Maine people expect better and deserve better than the treatment we received tonight.”

Lawmakers who were absent have 24 hours to cast a vote but even if all Republicans on the committee vote against the bill, it will move forward.

Hill and Rotundo said the bill could go to the House of Representatives as soon as Thursday for a vote.